AKRON (Feb. 12, 2001) — Farm tire dealers face an increasingly complex market as tire types and sizes proliferate to keep pace with the evolving farm machinery business, executives with Goodyear and Bridgestone/Firestone Inc. contend.
Those dealers are encountering not only an expanded number of SKUs, but also must deal with the reality of needing larger, more powerful field service vehicles in order to take care of their accounts properly, tire maker representatives said.
"Farm machinery keeps getting bigger and faster," said Ralph Burchfield, president of Firestone Agricultural Tire Co. "This, combined with more multi-purpose vehicles, means a steady increase in SKUs."
Firestone has attempted to keep a rein on SKUs, Mr. Burchfield said, but in the past year the company has seen its trimming of 100 sizes offset by about 300 new sizes/types being introduced—for a total of about 900 currently.
In general, growth is seen in two directions: taller and narrower for crop row navigation, and wider for greater traction and less soil compaction during plowing.
In the case of spraying equipment, the same piece of machinery may be outfitted with two sets of tires to obtain maximum output from that vehicle—one for the spring and another for some specific applications.
The size range is growing at the upper end to 54-inch and greater fitments, or what could be considered cross-over sizes with the off-the-road market.
The burgeoning number of SKUs also creates potential distribution problems, according to Jim Bamer, sales manager for farm tires at Goodyear, who said logistics is one of the most pressing concerns voiced regularly by Goodyear´s farm tire advisory board.
To understand the aftermarket logistics problem, Mr. Burchfield said that a person need only look at one statistic: size prevalence at OE vs. replacement. At the OE level, 15 sizes cover 80 percent of fitments, while it takes 50 sizes to provide the same replacement market coverage.
In addition, as tires get bigger and heavier, dealers must review their field servicing equipment and often find they have to upgrade—at a cost of $125,000 and up—Mr. Bamer said.
As for the market itself, farm tire executives were all pleasantly surprised that 2000 produced sales gains in all the key categories. But these same executives expect 2001 to back-slide a point or two, considering the continued softness in crop prices.
Providing a ray of hope: Demand for higher-priced and higher value-added radials is growing steadily, at the expense of the bias-ply tire. At OE, radials have picked up several percentage points of share each of the past few years, and now make up nearly 30 percent of fitments, industry data show.
A rule of thumb to remember: Nearly 100 percent of tractors above 100 horsepower are equipped with radial drive tires, while those with less than 100 horsepower are nearly all bias-ply.
Increasing horsepower is coupled with increased on-road driving, said Mark Pillow, marketing director, farm tires for Goodyear. And with it comes greater demand for uniformity, since the tire doubles as the suspension system on many tractors.
Within the ag tire market, the segments with higher than average growth include industrial—back-hoes, skid-steers etc.—and all-terrain-vehicle (ATV) tires, Mr. Burchfield said. Firestone is expanding into the ATV sector more aggressively this year, he added, with the Bridgestone Dirt Hook and Mud Hook lines.
At the other end of the spectrum, demand for forestry tires (which actually are closer in design to construction tires than to farm tires) is flat at best, Mr. Burchfield said, due to the shift away from wood-based newsprint-consuming media and to electronic media.
Goodyear and Firestone are considered the market leaders in both the OE and replacement markets, with Titan International Inc. a third major player. Goodyear, with import possibilities from both Asia and Latin America to complement its domestic manufacturing, offers the broadest range of products.
Firestone counts 1,800 certified direct and associate farm/forestry tire dealers in North America, while Goodyear advertises more than 800 certified "Gold Star Pit Stop" dealers in the U.S.
Titan has turned the bulk of its efforts to its proprietary LSW (low sidewall) product range, including a replacement market initiative started in mid-2000 through farm equipment dealers to broaden farmers´ exposure to the LSW products, the company said in a recent financial filing.
Michelin North America Inc. and Continental Tire North America Inc. are two other players of note in the replacement market, although both entered the farm tire market only in the past several years and still offer a limited program.
Among importers, Israel´s Alliance Tire Co. is expanding its efforts in North America, while Finland´s Nokian Tyres P.L.C. focuses primarily on the forestry end of the business. In addition, an increasing percentage of bias-ply implement tires is being sourced from China, India and other low-cost Asian sources, industry data show.